Vipshop - Q3 2023

Transcript

Operator (participant)

Ladies and gentlemen, good day, everyone, and welcome to Vipshop Holdings Limited's Third Quarter 2023 Earnings Conference Call. At this time, I would like to turn the call to Miss Jessie Zheng, Vipshop's Head of Investor Relations. Please proceed.

Jessie Zheng (Head of Investor Relations)

Thank you, operator. Hello, everyone, and thank you for joining Vipshop's third quarter 2023 earnings conference call. With us today are Eric Shen, our Co-founder, Chairman, and CEO, and Mark Wang, our CFO. Before management begins their prepared remarks, I would like to remind you that the discussion today will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but are not limited to, those outlined in our safe harbor statements in our earnings release and the public filings with the Securities and Exchange Commission, which also applies to this call to the extent any forward-looking statements may be made.

Please note that certain financial measures used on this call, such as non-GAAP operating income, non-GAAP net income, and non-GAAP net income for ADS, are not presented in accordance with U.S. GAAP. Please refer to our earnings release for details relating to the reconciliation of our non-GAAP measures to GAAP measures. With that, I would now like to turn the call over to Mr. Eric Shen.

Eric Shen (Co-Founder and Chairman and CEO)

Good morning and good evening, everyone. Welcome, and thank you for joining our third quarter 2023 earnings conference call. We continued to see decent momentum throughout the third quarter, with sales and profit growth ahead of expectations, while we accelerate our efforts on strategic priority to capture customer mindshare. Among the driver, apparel categories continued to outperform with over 16% growth in GMV year-over-year. High-value customers increasingly relied on us as they looked for great deals. Active Super VIP member grew 17% from a year ago and accounted for 45% of our online spending in the third quarter. We continued to execute well and drive changes for the long term. We've made it clear that we'd like to be the first to go-to online shopping destination for apparel.

To that end, we are pushing forward with a strategic improvement related to merchandise expansion, best value for money, and worry-free service for our customers. Our merchandise team is more skilled at developing a rich and diverse mix of branded products. To date, we have added several hundred trendy and high-end brands this year, and we have a complete system to help new brands grow their business faster by providing the right mix of resource support, including traffic allocation, customer analytics, and the channel promotion. Also, as a buyer-based platform that highlights carefully selected products, we will launch the contents like Buyers Must-Have, which is tailored for apparel category and customer behaviors on Vipshop to interest different types of users. On Made For Vipshop, our team has done a better job of identifying product opportunities together with brand partners.

We now have enlarged the supply of customer customized offerings, with SKUs available for sale trending up every month. The customized offerings perform better in categories like clothing and shoes and bags. This has motivated brand partners to deepen their collaboration of customized products with us. While we are growing our merchandise selection, we are committed to providing our customers with affordability. We are focused on seeking out the best deal for our customers to make sure they get value with great everyday prices and also through unique and customized products. We provide additional savings opportunities through our popular loyalty programs.

Lastly, we are improving customer shopping experience that include overall set of enhanced capabilities from the worry-free quality guarantee, enriched product detail page, integrated customer service together with brand partners to improve fulfillment efficiency through seamless process management. For example, as part of our enhanced quality assurance program, we recently reached a strategic collaboration with China Inspection and Certification Group to upgrade our quality control system. With all of these competencies at the core of our business, we are in a better shape to deepen engagement with our customers. Our Super VIP members recognize our unique strength more than the others because of the trust, value, and ease they've enjoyed at every interaction. Super VIP members has consecutive quarters of double-digit growth. Overall, retention and the renewal rates are trending higher. Average spending is also ticking up.

As we look ahead, we are confident that our business will stay, will stand firm in the face of a still challenging environment. We are encouraged to see a deepening level of trust we will establish with our brand partners and the customers, and we are uniquely positioned to secure consistent product supply that is aligned with the customers' preference for value spending. We are confident about being a long-standing player with stable, sustainable growth prospects. At this point, let me hand over the call to our CFO, Mark Wang, to go over our financial results.

Mark Wang (CFO)

Thanks, Eric. Good morning and good evening, everyone. We are delighted to see that third quarter results exceeded our expectations. Leveraging our elevated customer mindshare in apparel categories and the value for money offering, we delivered satisfactory revenue growth despite a slow season in the third quarter. With continued focus on high-quality growth, profitability remained strong. Gross margin increased by two percentage points year-over-year to 23.6%, a record high in three years, primarily benefiting from favorable category mix and optimized merchandise portfolio. Non-GAAP operating margin hit an all-time high of 9.1%, as we stayed disciplined when managing every expense item. Non-GAAP net margin attributable to Vipshop's shareholders maintained at a high level of 8.1%. Meanwhile, we value shareholder interest from long-term perspective.

As of the end of third quarter, we have returned a total of approximately $2 billion to our shareholders since April 2021. We remain committed to executing our share repurchase program. Going forward, we are positive on the long-term growth outlook, supported by the underlying strengths of our unique business model. We believe our enhanced efforts from merchandising to supply chain will help us capture the opportunities presented by consumers' increasing needs for value, for money offerings. Now, moving to our detailed quarterly financial highlights. Before I get started, I would like to clarify that all financial numbers presented below are in the renminbi, and all the percentage change are year-over-year change, unless otherwise noted.

Total net revenues for the third quarter of 2023 increased by 5.3% year-over-year to CNY 22.8 billion, from CNY 21.6 billion in the prior year period. Primarily attributable to the growth in active customers and spending, driven by the recovery in consumption of discretionary categories. Gross profit increased by 14.9% year-over-year to CNY 5.4 billion, from CNY 4.7 billion in the prior year period. Gross margin increased to 23.6% from 21.7% in the prior year period. Total operating expenses increased by 9.6% year-over-year to CNY 4.0 billion, from CNY 3.7 billion in the prior year period.

As a percentage of total net revenues, total operating expenses was 17.6% as compared with 16.9% in the prior year period. Fulfillment expenses increased by 9.5% year-over-year to CNY 1.6 billion, from CNY 1.6 billion in the prior year period. As a percentage of total net revenues, fulfillment expenses was 7.8%, as compared with 7.5% in the prior period. Marketing expenses increased by 17.0% year-over-year to CNY 669.6 million, from CNY 572.4 million in the prior period. As a percentage of total net revenues, marketing expenses was 2.9%, as compared with 2.6% in the prior period.

Technology and accounting expenses increased by 10.3% year-over-year to CNY 435.3 million, from CNY 394.8 million in the prior period. As a percentage of total net revenues, technology and accounting expenses was 1.9%, as compared with 1.8% in the prior period. General and administrative expenses increased by 5.5% year-over-year to CNY 1.13 billion, from CNY 1.07 billion in the prior period. As a percentage of total net revenues, general and administrative expenses was 5.0%, which stayed flat as compared with that in the prior period. Income from operations increased by 34.8% year-over-year to CNY 1.5 billion, from CNY 1.1 billion in the prior period.

Operating margin increased to 6.7% from 5.3% in the prior period. Non-GAAP income from operations increased by 33.0% year-over-year to CNY 2.1 billion, from CNY 1.6 billion in the prior period. Non-GAAP operating margin increased to 9.1% from 7.2% in the prior period. Net income attributable to Vipshop's shareholders was CNY 1.2 billion, as compared with CNY 1.7 billion in the prior period. Net margin attributable to Vipshop's shareholders was 5.3%, as compared with 7.8% in the prior period. Net income attributable to Vipshop's shareholders per diluted ADS was CNY 2.91, as compared with CNY 2.70 in the prior period.

Non-GAAP net income attributable to Vipshop's shareholders increased by 15.5% year-over-year to CNY 1.8 billion, from CNY 1.6 billion in the prior period. Non-GAAP net margin attributable to Vipshop's shareholders increased to 8.1% from 7.4% in the prior period. Non-GAAP net income attributable to Vipshop's shareholders per diluted ADS increased to CNY 3.33 from CNY 2.56 in the prior period. As of September 13, 2023, we had cash and cash equivalents and restricted cash of CNY 19.6 billion and short-term investments of CNY 451.9 million.

Looking forward to the fourth quarter of 2023, we expected our total net revenue to be between CNY 31.8 billion and CNY 33.3 billion, representing a year-over-year increase of approximately 0%-5%. Please note that this forecast reflects our current and preliminary view of the market and operational conditions, which is subject to change. With that, I would now like to open the call to Q&A.

Operator (participant)

Thank you. To ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. Thank you. We will now take our first question. Please stand by. First question is from the line of Thomas Chong from Jefferies. Please go ahead.

Thomas Chong (Equity Analyst)

Hi, good evening. Thanks, management, for taking my questions. I have two questions. My first question is about the latest GMV trend that we are seeing in the month of October, and so far in November, and also our feedback on Double Eleven. My second question is about 2024 outlook. Can management comment about how we should think about the outlook next year and also the competitive environment?

谢谢管理层介绍我的提问。我的第一个问题是关于我们最近看到我们GMV的趋势的。管理层可以分享一下我们看到10月份还有，11月，现在看到的情况，然后对双十一我们，可以分享一下我们对新一年的看法？第二个问题是关于，2024年，我们对，我们，收入的一个GMV的一个展望，然后对，整个行业的竞争格局，或者是竞争环境会有什么看法？谢谢。

Eric Shen (Co-Founder and Chairman and CEO)

好，我回答这个问题啊。首先就是问关于10月、11月及12月的看法。那么目前看10月份，因为气候是有点反常啊，就是说天气比较暖，那么所以说整体好像电商上的生意一般。那么但11月份呢，我们看到，那么整体那个有转冷的迹象，另外有些地方也已经冷了，那么那个我们看到，比如说像双十一，我们其实也做得不错，双位数的增长。那么但是呢，在未来哦，确实因为现在天气都说不准，所以说我们说的在未来整体趋势有可能会根据天气的变化，导致可能天气要冷了，那么买多些衣服或者买多一些厚的衣服。那么总体呢，我们觉得我们自己还是相对比较稳健，那么如果天气要冷一点，可能对我们更好一点。那么第二个呢，是问那个关于2024年啊，2024年呢我们总体，因为我们现在等于整体继续是稳健增长，那么我们自己在想办法，就是说关于我们的毛利、净利，那么包括结构其实都，都非常健康。但是，但是呢我们其实也希望在用户的增长方面，那么我们找到一些好的方法，用户增长再快一些，然后呢，就是其实对未来的生意增长也会更快一些。但是我们总体在2024年打的其实就是叫稳健，稳健增长牌。那么我们自己想，就是说外面其实包括2024年确实有不确定因素啊，外界的环境变化，那个各种各样的情况，包括那个消费的情况，会有一些变化，那个说不准。但是呢，我们觉得我们还是稳健地对待这个问题，就是我们自己先稳健地做好2023年，那么再以稳健的姿态走完2024年，对。

Speaker 8

Okay. On the first question of the latest GMV performance in recent months. Actually, I think, entering into Q4, overall performance was a bit muted, especially for apparel categories, because of the abnormal weather conditions in October. And the seasonal shift for autumn and winter clothing seemed to coming slower than expected. But apparel categories have been picking up very nicely in recent weeks, especially during the Double Eleven event. And the overall GMV growth during our Double Eleven has actually reached double digits growth, outperforming the industry average quite meaningfully. So, we still have some expectations for the rest of the quarter, but it still depends, especially, on the weather conditions.

If the winter kicks in colder than expected, we should have a much better performance. For the year ahead, 2024, our overall strategy continues to be focusing on achieving stable and healthy growth. I think a lot of the things through the last couple of years development have been reached a healthy level, especially for margins. No matter it's gross margin or net profit margin, all are on a healthy track. But we are looking for better growth, especially on the customer front. We are trying different ways to boost our customer growth for the long term. Of course, uncertainty remains, especially as to the consumption environment and a lot of other factors, et cetera.

We remain focused on the current strategy, and we believe that we will continue to be a very stable and healthy player in the industry for the year ahead.

Thomas Chong (Equity Analyst)

谢谢。

Operator (participant)

Thank you. We will now take our next question. Please stand by. The question is from the line of Ronald Keung from Goldman Sachs. Please go ahead.

Ronald Keung (MD and Equity Research Analyst)

Thank you. Thank you, Eric, Mark, and Jessie. So I have two questions. First is we see that the growth margin has reached a new high. Where should we see kind of as apparel, I think, is a big quarter for in terms of mix, that that should have boosted gross margins because of the apparel mix in the quarter. But how should we think about the growth margin upside into, let's say, 2024? What are the levers that we see for growth margin uplift from here with this new high level? And then my second question is on our buyback over the quarter.

I think, management, you just reiterated the ongoing buyback plan, but the absolute amount spent during the quarter is quite small compared to, let's say, the second quarter. So I want to know, is our buyback a function of share price or our cash, which is onshore or offshore, or this is just an unusual quarter and we plan to have a pretty balanced kind of buyback schedule throughout each quarter? Let me translate myself.

那个我回答第一个问题，第二个问题，Mark来回答。就是第一个就是问关于毛利的情况，那么我们其实三季度的毛利是优于去年，那么其实呢，我们其实对供应商的收费模式啊，其实没有变化，因为我们现在大家的负担也比较重，那么我们其实也没有加价，继续维持原价。那么对有的品牌呢，我们还送那个优惠，比如说他多做多生意，我们相对在扣点上还节约。所以理论上呢，我们的毛利是维持原来水平，看到比去年要高，因为我们其实就是像Q3的话，我们自己在送券方面其实比较谨慎。那么但是呢，我们也看到，就是如果自己不主动地送券，那么其实生意也差不多。就是我们讲的就是也找到一种比较健康的方式。所以说我们现在呢，在毛利上面呢，我们觉得啊，就是目前是健康状态，那么包括Q4，包括未来啊，我们觉得毛利的增长空间不大，就是说因为我们不可能再提价了，那么另外我们也发券，但是呢，我们在净利方面，我们觉得还有空间。那么包括Q4，那么我们其实一年的净利是每个每年是最好的，包括明年的Q，明年的全年，包括我们自己继续降本增效。那么另外呢，包括我们讲的明年的增长的规模效应，我们觉得利润还是会有，就是净利润啊，还是会有空间，但是没有像比如说我们，比如说像今年比去年的提升空间已经蛮大了，不可能类似再降这么大。但是呢，我们相信还是会有，有不少空间，但是不会很大空间。

Speaker 8

Okay. On the first question about GP margin expansion. The GP margin expansion in Q3 was actually primarily driven by the higher margin apparel, which had a higher contribution year-over-year. And also, our cost saving initiatives, especially on the customer incentives, have been well put in place. It's not that the take rate, how much we take from brand partners, has actually not changed that much. And instead of increasing the take rate from brand partners, we actually offered a lot of incentives for brand partners to grow their business together with us, so that they can save, actually save a lot of money.

The GP margin has reached a relatively high level, so we think there is not that much room for it to improve further in Q4 or for the year ahead, because we won't, you know, increase the take rates from for brand partners. We won't issue that customer coupons as well. We think we find a better and healthier way to grow our business and as well as our customers.

But on the other hand, in terms of NP margin, we think we still have some room for further expansion, and especially for Q4, it's typically a peak season for us in terms of margins, especially NP margins. So, we should see a higher NP margin in Q4. And for 2024, we still have some economy of scale and some operating leverage, especially on the marketing expense front. We continue to be prudent and invest only when and where we feel there is a need and the returns are okay. So, we think NP margin still has some room for expansion, but not as meaningful as we have seen for 2023 versus 2022.

Mark Wang (CFO)

Okay, Hi, Ronald, this is Mark, and thanks for your great question regarding the share buyback. I will answer your question, okay? Well, first off we have been steadily executing our buyback programs. At last quarter, we have utilized around 404 million of our current $1 billion share repurchase program, and that is to see, starting from the second quarter 2021, we have returned a total about $2 billion to our shareholders as of the third quarter 2023. The remaining $551 million buyback is being executed. Secondly, we are committed to executing the buyback as it's a way to show confidence in our long-term growth prospect. Also we think about providing relatively stable returns for shareholders and investors.

Last but not least, we have been doing from time to time with some flexibility to take risk factors into account, we think sharp volatility. So that regarding the share buyback programs. Thank you.

Ronald Keung (MD and Equity Research Analyst)

Thank you. Thank you very much.

Operator (participant)

Thank you. We'll now take our next question. Please stand by. Next question is from the line of Alicia Yap from Citigroup. Please go ahead.

Alicia Yap (MD and Senior Equity Analyst)

Hi, Good evening management. Thanks for taking my questions. Very quickly wanted to ask, as we enter 2024, with demand for apparel and the discretionary spend likely to experience the normalizing growth, so what are VIP strategies or plans to enhance your growth outlook, or your user purchasing frequency? What could be the normalized growth percentage for next year? Does management think the consumption sentiment will be improving from this year level? Thank you.

Eric Shen (Co-Founder and Chairman and CEO)

嗯，可以。

她的问题是，2024年的这个增长的展望，因为随着，对可选消费品，特别是服装，它的这个增速回正常化，唯品会有什么具体的举措能够增强用户的这种粘性，复购，以及它的这个ARPU，能够带动怎么样，就是看明年是什么样的一个增长率。然后就是对明年的这个消费的大环境是怎么样的看的。

那么我们总体看，就是整体的大环境啊，因为毕竟我们在整个电商的份额中，我们占比比较小嘛，所以理论上我们的空间还远远没有到头啊，我们其实还是很小的用户群，所以说我们其实对用户群的扩展还是我们有的极强的信心。那么另外呢，也在努力在做好这件事情。那么我们说的一方面就是说我们要吸引更多的客，那么还有呢，就是我们的顾客，要老的顾客要更多的留存。那么其实包括我们也在想，就是一方面是营销，那么但是呢，最重要的其实我们其实是发挥我们这种叫品牌特卖的网站的优势，包括我们这种货品，那么尤其是差异化的货品，包括穿戴类的，就是我们说的价格要有优势，那么或者有些是独家的，有些是专供的，有些是买断的，那么等等，类似这样子，我们其实通过商品来给我们的用户创造价值。那么我们觉得其实两方面都要抓，那么但是尤其在货品方面的投入，我们觉得更重要。所以说总体而言呢，我们对前景还是觉得，我们对我们来讲，就，就是我们讲的特卖的消费人群，其实这个规模还远远不够。我们假设现在大概不到一亿的用户，那么但是接下来呢，我们其实在就发挥我们这种穿戴的优势，在货品上面，我们用各种方法更，更出色，让消费者觉得唯品会的价值和与众不同。那么另外我们在营销上面，包括在体验服务上面，我们也要加强，因为我们说的不仅是东西好，那么价格便宜，那么另外呢，就服务质量各方面，那个体验也是要大家觉得是一流的。

Speaker 8

On the 2024 growth outlook, we are pretty confident that we can achieve stable and sustainable growth for the long term. We are still a very small player in China's e-commerce industry and with a limited number of active customers, so we still have a lot of potential to grow our customer base. We are very confident about that. On one hand, we continue to attract new customers and increase and improve the retention of existing customers, and especially grow our VIP members. And in addition to marketing spend, we think merchandising portfolio is a more important factor to help us grow faster. We continue to expand our merchandising portfolio, including unique offerings, Made for Vipshop, customized offerings, as well as buyout offerings.

We will continue to leverage the combination of these product offerings to add value to our customers. And speaking of customer base, you know, we still have less than 100 million annual active customers, so we think as long as we can continue to upgrade our platform to focus on apparel categories, to be a better and unique and the only one in the vertical discount retail segment. As we continue to enhance our customer experience and services, we will grow our customer base from the current level very meaningfully.

Operator (participant)

Thank you. As a reminder, if you would like to ask a question, you can press star one and one on your telephone, and to cancel your request, you can press star one and one again. Thank you. We'll now take our next question. This is from the line of Jialong Shi from Nomura. Please go ahead.

Jialong Shi (Equity Analyst)

Hey, 谢谢管理层, thanks for taking my question. I will first ask my questions in Chinese, then I will translate them myself. 谢谢管理层，接受我的提问，然后我这里有一些，这个就是说追问啊，然后第一个的话就是，刚刚也有 人问到我们那个buyback，然后我就是想问一下，就是我们现在的这个，就是授权的这个就是$500 million多，还剩下的这个buyback，如果用完的话，那之后是不是可以预期管理层或者公司的董事会还是会，批准新的buyback？就是我们这个buyback是不是，会恒常，会每年会做下去？然后的话，能不能请管理层给我们一些，一些，大概的，哪怕是粗略的指引，就是说我们大概就是说每年的话，我们就是说有没有一个大概的一个目标，就是说会回购多少金额或者是多少，数量的这个股份。这是第一个问题。第二个问题的话，就是刚刚Eric，提到，就是我们的那个gross margins毛利率就是现在当然已经很高了，就23%-24%，然后未来可能再进一步，这个提升的空间可能没有那么大。那我想问一下的是，就是说这个毛利率未来是不是能够维持在现在这个23%-24%的这个水平，保持稳定。嗯，第三个的话，就是想问一下，这个Super VIP member刚才说 是，那个如果没有听错，是两位数的增长，然后想问一下Super VIP这个会员的这个数量的具体增长，这个季度增长了多少？然后来自于Super VIP的这个收入贡献占比是多少？就这三个问题，我自己翻译一下。So I just ask three questions to the management. The first question is a follow-up question on the buyback. Just wonder if we should expect the company, Vipshop, to continue to top up the buyback program when the current $500 million plus USD buyback authorization is fully utilized. And also just wonder if management can provide some rough ideas, what is the size of buyback company may consider or company board may consider on an annual basis?

The second question is a follow-up on the management earlier remark on the growth margin. So I just wonder if, VIPs, will be able to maintain the current, 23%-24% growth margin stable going forward. And the third question is about the number of Super VIP member. Just wonder what is the growth, the exact growth of the Super VIP member in this quarter, and also the revenue contribution from Super VIP member in Q3. Thank you.

Eric Shen (Co-Founder and Chairman and CEO)

那么第一个问题就是我回答一半，就是关于那个，就是我们因为现在还有$500 million多的额度嘛，那么我们董事会也是非常支持我们的回购，因为对于来讲，现在其实确实比较划算，所以说我们可以随时等到$500 million多快用完了，或者用到中间的时候，我们随时向他们再申请，比如再要一个$500 million，甚至$1 billion都没有问题，因为我们现在大家对这方面的看法是一致的。...

那么关于怎么买，因为确实我们说没有一个规律啊，那么到时候那个需要的话，Mark可以补充。那么第二点问的是F-

Jessie Zheng (Head of Investor Relations)

GP margin。

Eric Shen (Co-Founder and Chairman and CEO)

哦，GP margin。毛利率就是我们是，比如问2024年的毛利也是差不多是这个，对吧？

Jessie Zheng (Head of Investor Relations)

对 。

Eric Shen (Co-Founder and Chairman and CEO)

OK，那么我们自己认为大概在2024年，因为我们也不可能涨品牌扣点啊，所以我们理论上就是2024年的毛利率，应该跟2023年做得好的期间是差不多的。所以只是我们刚刚讲的，我们对净利还是觉得还是有空间的，就是说因为通过很多方法，那么最后把净利继续提高。那么第三点是关于我们现在的SVIP，我们也是增长的不错，我们现在的SVIP是670万用户啊，那么贡献我们的生意是45%。那么而且呢我们，我们看到就是像这些的，那个SVIP的，包括它的UP啊，包括它的各方面表现都还不错，所以说我们也会积极维护好这批用户，那么发挥出我们这批用忠诚用户的优势。

Speaker 8

Okay, first on the buyback, we still have $500 million left in our existing buyback program, and we will continue to execute that. The board is very supportive of the current buyback plan, and, the usual practice first in the past, is that as we are close to, it fully utilizing the current buyback program, we will, ask the board for, the approval of the next buyback program. As the board and the management has reached, the consensus on the buyback, especially given the share price is still deeply undervalued, we will continue, to, approve new buyback as long as, as soon as we finish that or even during the process.

As to how we are going to execute the buyback program, it's too much detail. You just have to remember that we will be executing the buyback program from time to time and on a continuous basis. On the GP margin, we have reached three-year high of over 23%. But as we mentioned earlier, there is not so much room for us to further expand our GP margin because we are not going to increase the take rate for brand partners. Instead, we are going to incentivize them to grow their business faster with Vipshop. So there is not too much room for us to improve growth margin.

But for the next year, the growth margin will be maintaining at a similar level as compared to 2023. Especially in the quarters with relatively good gross margins. And there, I've also mentioned that on the NP margin, we still have a good chance of expanding that because of the economy scale and operating leverage. We are pretty confident on that. On the SVIP, we currently have 6.7 million active SVIP customers, accounting for 45% of our online spending, and they have maintained a double-digit growth for several quarters so far. And all the operating metrics for SVIP members are outperforming, including ARPU, frequency, et cetera.

So we will continue to focus our efforts on maintaining the SVIP customer base and elevating their loyalty and trust with our platform so that they can spend much more for the longer term.

Mark Wang (CFO)

Okay, this is Mark. Jialong, I will give some supplement comments regarding your question for the share buyback, and we would like to create and return value to our shareholders, and we have confidence in our long-term growth prospect. Therefore, we will execute the share buyback program from time to time, and we do not have accurate target volume or amount for the share buyback every quarter. But I think one thing is that we have $1 billion share buyback program lasting for 2 years. Okay? I think that can give you a concept regarding your question. Okay? That's all. Yeah.

Eric Shen (Co-Founder and Chairman and CEO)

Thank you.

Operator (participant)

Thank you. Due to time constraints, that concludes today's question and answer session. At this time, I will turn the conference back to Jessie for any closing remarks.

Jessie Zheng (Head of Investor Relations)

Thank you for taking the time to join us today. If you have any follow-up questions, please don't hesitate to contact our IR team. We look forward to speaking with you next quarter.

Operator (participant)

Thank you. That does conclude the conference for today. Thank you for participating, and you may now disconnect.